Contemporary Thought

Once more, between the economists, there is dissention. While economies flounder, colleague disputes with colleague and, in the tumult, we look back on the fifties and sixties as a golden age. Keynes’s theorems had by then been assimilated. They had left much of the old teaching material intact — marginal productivity and utility, diminishing returns, equilibrium — and had presented additional material concerned with public policy, money supply and the rate of interest. The nature of interest had been redefined, savings distinguished from investment (though, ex post, they mysteriously coincided) and the concept of involuntary unemployment had been defined and legitimised. Teachers were thus enabled to talk plausibly about the trade cycle. And most important for their peace of mind, the methodology of economics was left undisturbed: theorising by deduction from axioms arrived at a priori; exemption from the tedium of empirical research.